* Most Asian currencies on track for annual losses
* Yuan set for biggest yearly fall since mkt began in 1994
* Taiwan dollar shows resilience in 2016
(Adds text, updates prices)
By Masayuki Kitano
SINGAPORE, Dec 30 (Reuters) - Asian currencies rose on the
last trading day of 2016 on Friday, but most were set to post
annual losses as the U.S. dollar climbed on expectations of
higher interest rates next year.
Emerging Asian currencies were generally higher on the day,
with the dollar losing some steam after the euro briefly soared
on stop-loss buying in thin year-end trading.
"This is more a position adjustment rather than something
fundamentally changing in the background," said Sim Moh Siong,
FX strategist for Bank of Singapore.
"Our view is still for Asian currencies to weaken over the
course of next year," he said.
While Asian currencies could rebound early in 2017 if the
dollar retreats, such a pull-back could provide an opportunity
to buy the greenback on dips, Sim added.
Investors are waiting to see if U.S. President-elect Donald
Trump will quickly push expansionary fiscal policies once he is
sworn in on Jan. 20, which would boost expectations for higher
inflation and interest rates.
The Chinese yuan was the worst performer among major Asian
currencies in 2016, and market watchers expect it to recoil
further next year if the dollar continues to climb.
The yuan is down nearly 6.6 percent against the
dollar in 2016, putting it on track for its biggest annual fall
since China established its foreign exchange market in 1994.
Concerns about capital outflows and a slowdown in China's
economy have weighed on the yuan along with the stronger dollar,
and investors are also worried about a potential increase in
U.S.-China trade tensions under the incoming Trump
administration.
The Taiwan dollar is on track for an yearly gain of
2.7 percent, making it the best performing emerging Asian
currency in 2016.
The Taiwan dollar had gained a boost earlier this year,
helped by large foreign investor inflows into Taiwanese
equities.
Overseas investors, however, have pulled money out of
Taiwanese equities in the fourth quarter, and that has weighed
on the Taiwan dollar as of late.
Emerging Asian currencies have declined broadly since early
November as U.S. bond yields jumped on expectations that Trump's
proposals for infrastructure spending and tax cuts will boost
economic growth and inflation.
Worries about Trump's stance on trade have also weighed on
the currencies of export-dependent countries in Asia.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0540 GMT
Currency Latest bid Previous Pct
day Move
Japan yen 116.78 116.55 -0.20
Sing dlr 1.4460 1.4480 +0.14
Taiwan dlr 32.196 32.312 +0.36
Korean won 1205.15 1207.70 +0.21
Baht 35.81 35.95 +0.39
Peso 49.720 49.720 +0.00
Rupiah 13435 13460 +0.19
Rupee 67.97 68.11 +0.21
Ringgit 4.4845 4.4830 -0.03
Yuan 6.9496 6.9552 +0.08
Change so
far in 2016
Currency Latest bid End prev Pct
year Move
Japan yen 116.78 120.30 +3.01
Sing dlr 1.4460 1.4177 -1.96
Taiwan dlr 32.196 33.066 +2.70
Korean won 1205.15 1172.50 -2.71
Baht 35.81 36.00 +0.53
Peso 49.72 47.06 -5.35
Rupiah 13435 13785 +2.61
Rupee 67.97 66.15 -2.68
Ringgit 4.4845 4.2935 -4.26
Yuan 6.9496 6.4936 -6.56
(Reporting by Masayuki Kitano; Editing by Kim Coghill)